Mobile payment systems such as Apple Pay are changing the way we pay for goods and services, but their introduction to the marketplace has been slow. Many vendors have yet to make the transition to the necessary hardware, and those who have do not see it used very often. According to Forrester Research, only $6-7 billion out of an expected $3 trillion in 2015 retail sales will use mobile payments services.
Connected credit cards are trying to take advantage of this gap. These electronic cards work in conjunction with your smartphone to consolidate a number of your credit cards into a single, simple, space-saving electronic card, storing the relevant information off your cards and allowing you to recall them for a swipe at an individual point of sale. The smartphone app provides management capabilities for your accounts.
Since connected cards are effectively tethered to your Smartphone, thieves cannot easily exploit lost or stolen cards. In turn, that means you will need your smartphone nearby to use the card, or adjust settings to allow the card to be active for a certain amount of time without requiring the presence of the smartphone.
All of these cards work with most standard card readers and can consolidate almost every card that uses a standard magnetic stripe. You can include debit cards, gift cards, and vendor loyalty or membership cards. Connected cards all have some form of toggling system to select the proper card.
The two groups with cards currently on the market are Coin and Stratos. Coin began shipments in late 2014 and Stratos has been available since April. Here's a comparison of some of their features.
- Number of Cards – Coin allows storage of up to eight cards. Stratos can store more cards but only allows three to be active at any one time — the app is required to change out one of the active cards.
- Display – Stratos does not display your information, but simply allows you to choose the LED corresponding to one of three buttons on the card — better for security but it does require that you remember which card is assigned to which slot. Coin has a small display in the corner that shows the last four digits of the card number, the card issuer, and the expiration date.
- Activation – In both cases, you activate the card by tapping it on a surface. Stratos requires a simple tap and choice of one of the preset card buttons. Coin uses a tapping sequence (if enabled) and then allows you to toggle through your choices to the desired card.
You want to activate the card only when you need it to save on battery life. Both Stratos and Coin have non-rechargeable, non-replaceable batteries with a two-year life.
- Cost – Coin cards cost $100, so if the battery life holds true, you effectively pay $50 annually. Stratos is a subscription model costing $95 per year or $149 for two years. Stratos justifies the extra expense by claiming that this pays for periodic card upgrades and features to be announced in the future.
Both companies face a challenge in that neither is compatible with EMV security measures that are being imposed on card issuers in 2015. Both promise this capability in a future upgrade.
Stratos and Coin may be swept aside by at least two more formidable players later in 2015 — Plastc and SWYP. The prototypes of both can hold far more cards (20 for Plastc and 25 for SWYP), and they are expected to be EMV-compatible from the beginning. Plastc will offer a rechargeable battery and costs $155 for pre-orders. SWYP is expected to cost $100 but is currently available for $50 on preorder.
Will any of these companies find a niche? It's possible — but they have a narrow time window to achieve their goal. They have to convince consumers that the convenience they provide is worth the cost while incorporating EMV features and fending off challenges from mobile payment systems.
By the end of 2016 (if not sooner), we should know which connected card companies will survive and become an established product (if any). Until then, if you have credit-card-based wallet clutter and want to try out the technology, research your options in detail and see which one of these technologies is the best fit for you.
If you want more credit, check out MoneyTips’ list of credit card offers.